Memorandum to the French Embassy.
Washington, June 19, 1907.
After full and careful consideration of the memorandum of the ambassador of France, under date of March 26 last, in relation to the proposed application of the rates of the French general tariff to imports of Porto Rican coffee, now subject to the minimum rates, the Department of State respectfully submits the following observations thereon:
I.
According to French statistics for the calendar year 1905, the total imports into France of coffee from Porto Rico amounted to 2,191,364 kilograms, and from continental United States 1,158,619 kilograms, being together less than 4 per cent of France’s total importation of that article from the world, which is given as 90,985,423 kilograms. The French colonial possessions do not produce enough coffee to supply the French demand, the total importation from that source being-only 1,338,423 kilograms, while Brazil furnished 44,926,577 kilograms, Haiti 18,456,316 kilograms, British India 6,266,391 kilograms, Venezuela 5,848,307 kilograms, Colombia 3,269,361 kilograms, and Guatemala 3,234,097 kilograms. The general tariff rate of 300 francs per 100 kilograms—equivalent to 26 or 27 cents per pound—is prohibitory. [Page 299] The inevitable effect of imposing that maximum rate on Porto Rican coffee, while the minimum rate is continued for all other countries, would be to exclude such coffee and make it necessary for France to buy that portion of her supply from other foreign countries. Under these circumstances, the proposal to impose the maximum tariff on Porto Rican coffee upon its importation into France would seem to be rather a matter of trade prohibition than a matter of either revenue or protection.
Nevertheless, although the imports of Porto Rican coffee constitute only a small proportion of the total importation into France of that article, the retention of that market is of importance to the prosperity of Porto Rico and its loss as the result of a prohibitory tariff discrimination would be injurious to the industrial and commercial interests of the island. In the memorandum of March 26 the French ambassador refers to the provisions relative to the continued application to Porto Rican coffee of the minimum rates of the French tariff contained in the amendatory and supplementary agreement concluded between the two countries on August 20, 1902. In concluding this supplementary agreement the Government of the United States was actuated mainly by a desire to adjust in a friendly spirit the long-existing contention between the two Governments in regard to the applicability to Algeria of the commercial agreement of 1898. It was well understood at the time that the extension by the United States to Algeria of the reduced duties provided in the agreement of 1898 would be without adequate compensation on the part of France, unless the clause respecting Porto Rican coffee was inserted and continued in force, for the correlative extension to Porto Rico found practically no other exports to which it could apply. The purpose of this clause was to afford stability in the French market to Porto Rico’s principal article of export, and, at the same time, to establish a reasonable measure of equilibrium in the respective concessions so long as the concession of the minimum rate on coffee should continue. It is evident that this equilibrium would be completely destroyed by the imposition of the maximum tariff on Porto Rican coffee.
The conditional concession upon French still wines and vermuth, contained in the commercial agreement of May 28, 1898, terminable at will, is correlative to the continuance of those minimum rates of duty that have in fact been allowed to the United States by France since 1898, although not required by the agreement. If the maximum duty were imposed on Porto Rican coffee, which has hitherto enjoyed the benefit of the minimum duty, that conditional concession would, of course, be terminated under the terms of the commercial agreement of 1898. It involved, in 1906, a reduction of United States duties amounting to $86,205.85 on still wines and vermuth imported from France to the value of $1,092,232, a trade more than double the trade in Porto Rican coffee.
II.
The ambassador’s memorandum of March 26 suggests as compensation for the continued application of the minimum tariff to imports of Porto Rican coffee that the Government of the United States shall concede the duty reductions on French champagne and sparkling [Page 300] wines imported into this country (including Porto Rico) authorized by section 3 of the United States tariff act of July 24, 1897.
By reason of the serious sacrifice in the Federal revenues that would be entailed this Government has hitherto declined to make this concession to France, and for this reason it was omitted from the agreement of 1898 and, again, from the concessions proposed on the part of the United States in the unratified reciprocity treaty concluded between the two Governments on July 24, 1899. In the fiscal year 1906 the United States imported from France champagne and sparkling wines to the amount of 381,628 dozen quarts, valued at $5,613,311. The proposed concession under section 3 would therefore involve a reduction of United States duty amounting to $763,256 on the basis of that year’s importation.
The entire value of all the coffee imported into France from Porto Rico during the calendar year 1905, according to the French statistics, was only $439,847. The total amount of coffee imported into France from the United States in the same year amounted to $232,565. It is probable that only a small part, if any, of this was Porto Rican coffee; but if the whole of it were treated as from Porto Rico rather than as being a mere reexportation of coffee from other countries, the total subject matter to which the prohibitory tariff would apply would be only coffee of the value of $672,412. The suggestion of the proposed concession, therefore, practically is that the United States shall sacrifice revenue to the amount of $763,000 in order to save a market for produce of the value of $672,000.
In view of the considerations already set forth it is evident that the Government of the United States can not regard the proposed forbearance by France from imposing a discriminatory and prohibitory duty on Porto Rican coffee as a “reciprocal and equivalent concession,” as required by section 3, in compensation for a concession entailing so great an annual remission of duty on the part of the United States.
The Government of the United States, however, is earnestly desirous of improving the present unsatisfactory conditions affecting American trade with France, and to this end is willing to grant the reduced duties to French champagne and sparkling wines and to continue the present conditional concession upon still wines and vermuth in return for reasonable concessions by France in favor of certain products of the United States that are now subject to discriminatory tariff treatment upon their importation into that country.
III.
It has long been a source of great dissatisfaction and complaint among the manufacturers and producers of the United States who have sought to introduce their products in France that most American goods are subjected upon their importation into that country to the payment of tariff duties that range from 15 to 50 per cent higher than those imposed upon like goods imported into France from England, Germany, Belgium, or any other important commercial competitor of the United States in the French markets. In fact, the United States is the only important commercial country in the world whose exports are subject to this injurious tariff discrimination in France. Furthermore, France stands to-day as the [Page 301] only country which applies to imports from the United States an extensive system of discriminatory duties that do not apply to the principal competitors of the United States. This denial by France of equality of commercial opportunity for American trade interests in her markets is more prejudicial to the extension of commercial relations between the two countries than a much higher scale of duties of the French tariff universally applied would be.
On the other hand, the tariff policy of the United States toward France has been in marked contrast to the discriminatory tariff policy pursued by the latter. France now enjoys in the United States, under the commercial agreement of 1898, the entire conventional tariff rates of the United States, excepting only the reduction on champagne and sparkling wines. The tariff concessions made by the United States in favor of Cuban products are, of course, based upon considerations that are not duplicated in the relations between the United States and any other power. The proposed concession, therefore, by this Government in favor of French champagnes would, when added to the concessions made in the commercial agreement of 1898, put France in possession of the most-favored-nation tariff treatment of the United States as it now exists.
It has been computed that the American goods subject to maximum rates paid in the year 1905 about $500,000 more in customs duties than like merchandise imported into France from other foreign countries.
IV.
In the hope of correcting, as far as possible, the inequality of tariff conditions existing, as indicated above, in the commercial relations between the two countries, and with a view to meeting the wishes of the French Government in respect to the American duties on champagne and sparkling wines, the Department of State submits herewith inclosed the pro jet of a new commercial agreement to take the place of the existing conventions of May 28, 1898, and August 20, 1902, respectively.
This projet, which follows the lines of the new commercial agreement concluded between the United States and Germany on May 2, 1907, and effective from July 1, 1907, provides for the extension to France of the identical tariff concessions and ameliorations in the United States customs and consular regulations that have been guaranteed to Germany in the agreement referred to. It is designed to be merely provisional and to regulate the commercial relations between the United States and France until such time as the respective Governments may be able to agree upon and secure the adoption of a more comprehensive and permanent treaty of reciprocity. The modifications which this Government requests be made by the French Government in its customs regulations affecting admission of American cattle, meats, fruits, and plants will form the subject of a separate communication to the French embassy.
The reduction of the duty resulting from the minimum rates authorized by section 3, which the United States proposes to grant to France, as compared with the general rates of the United States tariff on the same articles, upon the amount of importations into the United [Page 302] States for the French products In the year ending June 30, 1906, would be as follows:
| Under the permanent clause of the commercial agreement on May 28, 1898 | $489,822 |
| Under the conditional clause relating to still wines and vermuth | 86,205 |
| Under the proposed additional clause relating to champagne and Sparking wines | 763,256 |
| Annual value of proposed American concessions | 1,339,283 |
| The difference between the minimum duties under the French tariff as compared with the maximum duties upon the amount of business for the year ending Dec. 31, 1905, under the binding effect of the commercial agreement of 1898 | 333,524 |
| The difference between the minimum rates which the United States asks France to give in place of the maximum rates now imposed would be upon the business of the same year | 396,209 |
| Annual value of proposed French concessions | 729,733 |
| Excess of American concessions over amount of French concessions | 609,550 |
In compensation for this excess of $609,550 in the respective concessions, the Government of the United States asks the Government of France to revoke its decree recently issued in relation to Porto Rican coffee and to modify its present restrictive regulations affecting entry of American cattle, meats, and plants, as set forth in the note to the ambassador of the French Republic of this date.